Views on the News – 7/21/2012

By: David Coughlin

In 1979, then-President Jimmy Carter told the nation he had detected a malaise in America, “a crisis of confidence … that strikes at the very heart and soul and spirit of our national will,” and now President Barack Obama seems to have created the same malaise. Politicians have learned well the lesson from Carter’s loss: Voters will blame leaders, not themselves, for such talk. The Great Recession of 2008 has exacted a terrible cost on the country, one measured by Americans’ feelings of confidence and hope. Obama is trying to set a “New Normal”: a dramatic resetting of our sense of what, exactly, is the American Dream. Where once economic success and upward mobility would have ranked high, they ranked last in the poll. Now Americans said they increasingly valued things such as good marriages (83%) and “a long and healthy retirement” (77%). In other words, we just want to be happy. It feels very European, a kind of inward-turning mindset where people get out of the rat race and focus on being content. America historically never was about being happy, instead it’s been “the pursuit of happiness,” a phrase that is all about striving, not attaining. The American Dream required ambition and taking risks; it was about fame, fortune, and making things better for the next generation, but no more, it seems. We’re all a bit frightened and ready to hunker down. The 2008 recession was unlike any since the Great Depression. Vast amounts of wealth were lost, including homes and retirement accounts. Despite Herculean federal spending, and predictions of a much quicker turnaround, the recession’s effects have lingered. Unemployment and underemployment remain high; many people have simply given up, dropping out of the workforce altogether. 55% percent of Americans feel personally scarred by the recession: 41% in Anderson Robbins’s survey say they “still have a ways to go,” while 14% say they may never recover. Indeed, the pollsters found that in general Americans now feel more “thrifty,” “determined,” and “worried.” Perhaps not surprisingly, we also feel a lot less “hopeful,” “charitable,” and “lucky.” Most profoundly, fully 59% believe that the next generation of Americans will have even fewer opportunities for achieving the American Dream, so this new Normal sounds like malaise to me.

It should be clear by now that Barack Obama is running his shaky presidential campaign in 3-D: dishonesty, deception and distraction. It is an age-old re-election strategy that tries to get the voters focused on tangential matters that are irrelevant to the larger issues that still plague our country, like severe unemployment that has turned the lives of tens of millions of Americans into a desperate struggle for survival; weak economic growth that has shrunk middle class and small business incomes; and four straight years of trillion dollar budget deficits that now threaten America’s solvency and future prosperity. President Obama is hoping that he can fool just enough of the people into giving him another four-year term, even though he’s failed to fulfill his 2008 campaign promises to put the country back to work, boost middle class incomes and cut the deficit in half in his first term. He is running a duplicitous, negative campaign against Mitt Romney, while ignoring all of the problems he has failed to fix and that still plague our country. Let’s start with dishonesty and deception. Obama is running vicious ads attacking Romney, charging that his investment firm, Bain Capital, made business deals that went sour and outsourced jobs around the world. Several respected fact checking groups and newspaper journalists have found these allegations to be false. The year 1999 is quite important because that’s when Romney left his company to rescue and run the Winter Olympic Games in Salt Lake City. The alleged outsourcing business investments by Bain occurred after Romney had stepped down from his company’s day-to-day operations. Romney had merely taken a leave of absence from his firm to help his country run the Olympic games, refusing any salary for his work that consumed all of his time. Another desperate attack ad has been running in half a dozen critical battleground states that attacks Romney’s jobs record while he was governor of Massachusetts in the years 2003 to 2007. What the demagogic Obama ad doesn’t mention is that when Romney finished his four-year term as governor, the Massachusetts unemployment rate was a low 4.6%. The core of Obama’s campaign strategy is based on distraction pure and simple. Drum up bogus charges on borderline issues that the national news media will trumpet, without questioning their veracity, in order distract the voters’ attention away from Obama’s failed policies on the economy. Certainly, there is a rich field of issues on which Obama is vulnerable to legitimate criticism. Romney has a proven record of a successful career investing capital in start-up businesses that became major employers, creating tens of thousands of jobs across the country. Obama, on the other has sunk at least $40 billion into green technology firms, many of whom had connections to his biggest campaign contributors. A growing number, like the California-based Solyndra solar panel company, have declared bankruptcy, leaving taxpayers to foot the bill for billions in bad loans. Mitt Romney’s challenge is to maintain the focus on issues important to the American voters to give them a clear choice in November to vault him into his next challenge of leading this country back to prosperity.

There is a class divide emerging in this country, but it is based on family advantages rather than income, with married couples having distinct advantages over single parent households. The economic storms of recent years have raised concerns about growing inequality and questions about a core national faith, that even Americans of humble backgrounds have a good chance of getting ahead. Most of the discussion has focused on labor market forces like falling blue-collar wages and lavish Wall Street pay, but striking changes in family structure have also broadened income gaps and posed new barriers to upward mobility. Married and living on two paychecks, gives the intact family a profound advantage in income and nurturing time, and makes their children statistically more likely to finish college, find good jobs and form stable marriages. College-educated Americans are increasingly likely to marry one another, compounding their growing advantages in pay. Less-educated women, including those who left college without finishing her degree, are growing less likely to marry at all, raising children on pinched paychecks that come in ones, not twos. Estimates vary widely, but changes in marriage patterns, as opposed to changes in individual earnings, may account for as much as 40% of the growth in certain measures of inequality. Long a nation of economic extremes, the United States is also becoming a society of family haves and family have-nots, with marriage and its rewards evermore confined to the fortunate classes. About 41% of births in the United States occur outside marriage, up sharply from 17% three decades ago. Equally sharp are the educational divides, which found less than 10% of the births to college-educated women occur outside marriage, while for women with high school degrees or less the figure is nearly 60%. Long concentrated among minorities, motherhood outside marriage now varies by class about as much as it does by race, with its fastest growth in the lower reaches of the white middle class. While many children of single mothers flourish, a large body of research shows that they are more likely than similar children with married parents to experience childhood poverty, act up in class, become teenage parents and drop out of school. Married couples are having children later than they used to, divorcing less and investing heavily in parenting time. By contrast, a growing share of single mothers have never married, and many have children with more than one man. The people with more education tend to have stable family structures with committed, involved fathers. The people with less education are more likely to have complex, unstable situations involving men who come and go. Nearly half the unmarried parents living together at a child’s birth split up within five years. Four decades ago, households with children at the 90th percentile of incomes received five times as much as those at the 10th percentile. Now they have 10 times as much and the gaps have widened even more higher up the income scale. The reasons are manifold: the growing premium a college education commands, technological change that favors mind over muscle, the growth of the financial sector, the loss of manufacturing jobs to automation and foreign competitors, and the decline of labor unions. Marriage also shapes the story in complex ways. Economic woes speed marital decline, as women see fewer “marriageable men.” The opposite also holds true: marital decline compounds economic woes, since it leaves the needy to struggle alone. For inequality more broadly, the growth in single parenthood in recent decades accounted for 15% to 25% of the widening income gaps. Comparing lower-middle- and upper-middle-income families, found that single parenthood explained about 40% of inequality’s growth. Across Middle America, single motherhood has moved from an anomaly to a norm with head-turning speed. As recently as 1990, just 10% of the births to women occurred outside marriage. Now it has tripled to 30%, compared with just 8% for women of all races with college degrees. Less-educated women are also more likely to have children with more than one man. A third of those with high school degrees or less already had children with multiple men. So did 12% of mothers with some post-high-school training. None of the women in the study who had finished college before giving birth had children with multiple men. That’s a dramatic difference, and it varies by education more than by race. Having men in the house for a short time with ambiguous parenting roles can be really disruptive for children.” Forty years ago, the top and middle income thirds had virtually identical family patterns: more than 95% of households with children in either tier had two parents in the home. Since then the groups have diverged, 88% at the top have two parents, but just 71% do in the middle. Researchers have found that extracurricular activities can enhance academic performance, and scholars cite a growing activities gap to help explain why affluent children tend to do so much better than others in school. Four decades ago, families in the top income fifth spent about four times as much as those at the bottom fifth on things like sports, music and private schools. Among those raised in the poorest third as teenagers, 58% living with two parents moved up to a higher level as adults, compared with just 44% of those with an absent parent. A parallel story played out at the top: just 15% of teenagers living with two parents fell to the bottom third, compared with 27% of teenagers without both parents. You’re more likely to rise out of the bottom if you live with two parents, and you’re less likely to fall out of the top. While many studies have found that children of single parents are more likely to grow up poor, less is known about their chances of advancement as adults, but there are suggestions that the absence of a father in the house makes it harder for children to climb the economic ladder.

There is no theory anywhere in non-Marxist economics that says growth’s primary engine is a social class and a middle class is the result of growth, not its cause, but Barack Obama not only believes in class-based growth but has built his whole growth strategy around it. Prior to Marx, people did not clearly think of economics as class divided and did not think of the collective overriding the individual. Certainly the thinking was there sociologically, but not crystalized in economics. Most entrepreneurs would tell you they succeed in spite of the government, but Barack Obama views it differently since he clearly believes we all owe our success to government. No one denies that others played roles in their lives, but the people who played roles were, in fact, people. The President clearly believes that individuals give back to society by paying into government. But people give back all the time through volunteerism, charitable contributions, raising families, and their own individual work product. No one denies there is a role government plays, but most people are more likely to view their lives as their lives, not the government’s. They view their accomplishments as their accomplishments while acknowledging others who helped them. Barack Obama suggests good society is derived from good government. Truthfully, it is that good government is derived from a good society. History shows us that the best societies, generating the best governments, are those societies that value private property. Societies founded on a private property right are far more stable than others. Barack Obama wants to be the arbiter of fairness and no society long remains either moral or uncorrupt when it lets its leaders arbitrate fairness, so November is the time to decide whether the government defines how you spend your money, or you, yourself, retain that authority.

The Obama Department of Health and Human Services (HHS) released an official policy directive rewriting the welfare reform law of 1996 which guts the federal work requirements that were the foundation of the welfare reform law. The Obama directive bludgeons the letter and intent of the actual reform legislation and will allow the welfare state to regress to its bloated worst. Welfare reform replaced the old Aid to Families with Dependent Children with a new program, Temporary Assistance for Needy Families (TANF). The underlying concept of welfare reform was that able-bodied adults should be required to work or prepare for work as a condition of receiving welfare aid. The welfare reform law was very successful. In the four decades prior to welfare reform, the welfare caseload never experienced a significant decline, but, in the four years after welfare reform, the caseload dropped by nearly half. Employment surged and child poverty among affected groups plummeted. The driving force behind these improvements was the rigorous new federal work requirements contained in the TANF law. The Obama Administration issued a new directive stating that the traditional TANF work requirements can be waived or overridden by a legal device called the section 1115 waiver authority under the Social Security law. Section 1115 states that “the Secretary may waive compliance with any of the requirements” of specified parts of various laws. In establishing TANF, Congress deliberately exempted or shielded nearly all of the TANF program from the section 1115 waiver authority. They did not want the law to be rewritten at the whim of Health and Human Services (HHS) bureaucrats. The new Obama dictate asserts that all the work requirements can be waived which removes the core of the TANF program; TANF becomes a blank slate that HHS bureaucrats and liberal state bureaucrats can rewrite at will and gut the law. Obviously, if the Congress had wanted HHS to be able to waive the TANF work requirements laid out in section 407, it would have listed that section as waiveable under section 1115, but it did not do that. It reflects the administration’s taste for the selective enforcement of the laws it is sworn to uphold. It cements executive orders and policy directives as the legislative instruments du jour, superseding boring, old-fashioned acts of Congress. Meanwhile a new Rasmussen Reports survey found that 83% if American adults favor a work requirement as a condition for receiving welfare aid! The Administration tramples on the actual legislation passed by Congress and seeks to impose its own policy choices, a pattern that has become all too common in this Administration, and the result is the end of welfare reform.

Mitt Romney should stop defending his past decisions at Bain, at the Olympics, and as Governor and, instead, he should be proud to use them to demonstrate his competence, experience, occasional failures, and most importantly his multiple successes based on mature business judgment. He should begin by defending the entire private equity industry. Bain invested in corporations that outsourced and off-shored and, no doubt, laid off many unfortunate workers. Keeping unproductive companies afloat might be a fantastic ending to a feel-good movie or an integral part of Congressional legislation, but the free market demands that creative destruction is an important part of economic growth. Team Obama’s entire attack is a massive distraction about the timeline of Romney’s tenure at Bain Capital or his lack of transparency about his wealth. Team Obama is allowed to create a false impression that there is wrongdoing and avoid defending its own dismal record. Bain filed documents with the Securities and Exchange Commission in 2002 that showed Romney as sole owner, chairman of the board, chief executive officer and president. This is supposedly a big deal because Romney has always maintained that he left Bain in 1999 to run the Salt Lake City Olympics. Bain, in fact, paid Romney $100,000 in 2001 and 2002 since he retained equity in the firm. The SEC filings show that “Mr. Romney has not had any active role with any Bain Capital entity and has not been involved in the operations of any Bain Capital entity in any way.” The consequences of Bain’s investments were mostly productive for the economy, occasionally not, but unlike the “investments” of this administration, companies like Bain would never wastefully pump hundreds of millions of dollars into unproductive Luddite experiments like Solyndra. We have yet to hear the fantastic story of how Romney rescued the failing Olympics. He inherited a project unprepared for this international event in financial disarray, and delivered a high quality event that actually made money. Romney also needs to trumpet his successes as Governor of Massachusetts. He turned that state’s finances around. He inherited a state 47th in job creation and left office with the state ranked 12th. He achieved “full employment” while Governor. He inherited a state with huge deficit spending, but left the state with a billion dollar emergency fund in place. Mitt Romney should be proud of his personal wealth creation and not be ashamed of his success and lifestyle. If Presidential candidates must be transparent about their lives, their finances, their business lives, then Romney should be able to demand the same level of transparency from Obama on his college transcripts and other yet-to-be-released information.

Under President Obama, service personnel’s rising fears of being prosecuted for acting to protect themselves and their missions are but one of many ways in which the military is being, to use his now-infamous turn of phrase, “fundamentally transformed.” There are a number of disturbing symptoms:

· Losing wars - Few things can have a more corrosive effect on morale and esprit de corps of the armed forces than being ordered to participate in and sacrifice in protracted conflicts, only to have political authorities throw in the towel.

· Defective Counter-Insurgency (COIN) strategy - The effort to win hearts and minds in places like Iraq and Afghanistan has exposed our troops unnecessarily to danger.

· Budget cuts - Even though defense spending accounts for approximately 20% of the budget, the Pentagon has been required to absorb roughly 50% of the cuts, while entitlements have been entirely spared.

· Military used as cultural transformation test bed – Civilian indifference to the unique attributes of the armed forces has caused the military to be used as a test bed for cultural transformation advancing the radical homosexual agenda.

Unfortunately these changes may precipitate the collapse of the All-Volunteer Force, as many of those who are currently serving decline to do so, and fewer and fewer new, high-quality recruits enlist. This undermining of the military may beanother unintended consequence of Obama’s “fundamental transformation,” and we can ill-afford such an Obama legacy in an increasingly dangerous world.

* There is so much published each week that unless you search for it, you will miss important breaking news. I try to package the best of this information into my “Views on the News” each Saturday morning. Updates have been made this week to the following issue sections:

About The Author David Coughlin:David Coughlin is a political pundit, editor of the policy action planning web site “Return to Common Sense,” and an active member of the White Plains Tea Party. He retired from IBM after a short career in the U.S. Army. He currently resides with his wife of 40 years in Hawthorne, NY. He was educated at West Point (Bachelor of Science, 1971) and the University of Alabama in Huntsville (Masters, Administrative Science, 1976).